Twitter’s advertising strategies are paying off. At the IAB’s Mixx Conference, on Tuesday, Twitter’s Chief Revenue Officer, Adam Bain revealed that 1,600 advertisers now use the micro-blogging site to reach consumers. He added that it also had a retention rate of 80% for advertisers. This is in line with CEO Dick Costolo’s announcement in July that advertisers had gone up by 600 percent as compared to 2010 when the number was in hundreds.
The upward swing in the number of advertisers is due to Twitter’s gameplan to enter into partnership with clients for specific projects. For eg. In March, Twitter partnered with Paramount Pictures to launch the trailer for a new film SUPER 8 on Twitter. At the conference, Bain announced that Twitter helped Super 8 sell 1 million sneak peek tickets and opening weekend box office exceeded projections by more than 50 percent.
In another case, Twitter launched a fashion show on Twitter with fashion line Burberry and witnessed a 14 % higher engagement and a ten times lift in brand mentions.
Engagements on Twitter ads are defined by clicks on click links and retweets, said Bain.
It is apparent that Twitter has laid a lot in store by advertisements. Only a few weeks ago, Costolo had told the media that advertising is a key strategy for the company. “Our advertising method is the only one we need to be a big business,” he said.
In the last few years, the micro-blogging site has faced a lot of flak for being slow in its approach to revenue. However, two recent reports by Internet survey websites, estimate a considerable hike in Twitter’s ad revenue in the approaching years.
Internet researcher and analyzer, eMarkerter’s report indicates that Twitter’s ad revenue, though expected to be lower this year is likely to grow significantly over the next few years once the platform’s self-serve ad product rolls out. In fact, eMarketer estimates that by 2013, Twitter’s worldwide ad revenue will be nearly $ 400 million.
Another study by SharesPost shows that Twitter will reach $ 329 million in revenue by next year and half a billion dollars in annual revenue by 2013 and surpass the $ 1 billion benchmark in 2016. Though slightly on the higher side, these numbers are still comparable with estimates made by eMarketer.
Though this figures pales in comparison with Facebook’s $ 4.27 billion projected revenue for the year, it needs to be considered that Twitter’s revenue generating suite of ad products has not been completely rolled out yet. SharesPost researchers comment, “We believe the company is still a year or two from fully monetizing all aspects of its platform.”
However, the SharesPost estimate comes with a crucial caveat. The promoted ad options are still relatively untested and the researchers explain, “We believe that most revenue generation options available to the company have the ability to alienate We believe that most revenue generation options available to the company have the potential to alienate at least some of Twitter’s user base. The company may not have adequate time to revise its models before it loses its critical mass and reputation… Promoted Tweets and Trends offer additional monetization options, but… is likely to turn off some users if the advertising gets too intrusive.”
In 2011, Twitter restructured its line of advertising products, which now includes Promoted Tweets, Promoted Trends and Promoted Accounts. Last month onwards, the company has started allowing advertisers to push tweets to users even if those users don’t follow the advertiser’s account.
Another source of revenue which the short messaging site will be tapping during end 2011 and 2012 will be political advertising.
The SharesPost report also indicates that Twitter is on the top rung as far as investment for advertisers is concerned. Researchers estimate the cost per acquisition for Twitter ads at around $ 0.14 to $ 0.50 as against the multi-dollar per acquisition amounts witnessed in email, mobile or telemarketing.
Whatever, turns out to be the exact figure, the thing that can be said with certainty is that Twitter is poised to be a big player in the advertising business and clients and competitors will do well to take note of this.